The first couple of reports from leading truckload carriers tallying up revenues and profits for 2004 suggests these carriers are enjoying positive momentum as they head into 2005.
“Pricing and freight demand continued to gain momentum during fourth quarter and I expect that freight demand and pricing will continue to be favorable in 2005,” said Clarence Werner, chairman & CEO of Omaha, NE-based Werner Enterprises. “A constrained supply of trucks with qualified drivers, combined with a steadily improving economy, are providing truckload carriers with the strongest pricing market in many years.”
“Looking forward, we expect the shipping environment to remain favorable based on U.S. economic growth of approximately 3% or better during 2005,” said Kevin Knight, chairman & CEO of Phoenix-based Knight Transportation. “We also expect industry-wide trucking capacity to remain constrained for the foreseeable future, mainly due to the limited number of qualified drivers. Against that background, we expect freight rates to increase at least as much as operating costs.”
Both Werner and Knight posted strong profits for 2004, which, despite higher fuel prices and rising driver compensation, is giving them confidence in the New Year.
For 2004, Werner’s net income increased 18% to $87.3 million on 15% higher operating revenues of $1.678 billion compared to 2003, with earnings rising 20% to $1.08 per share to close out the year. For the fourth quarter of 2004, Werner said net income increased 20% to $25.8 million on 20% higher operating revenues of $455.2 million compared to the fourth quarter of 2003.
“[Rate increases] are helping [our] company to offset inflationary cost increases for driver pay, truck engines, insurance, fuel, and tolls, including significant state toll increases that recently became effective,” added Werner. “The company’s fuel surcharge program helped to lessen the earnings impact of fuel prices.”
Knight said net income increased 35% to $47.9 million on 30.1% higher total revenue of $442.3 million for 2004 as compared to 2003. Taking out monies attained from its fuel surcharge, revenues increased 26% for the year to $411.7 million, Knight said. For the fourth quarter of 2004, net income increased 46.2% to $14.6 million as total revenues jumped 40.7% to $126.8 million compared to the same period in 2003, the carrier noted.
“Even with … significant fuel, driver pay and other cost pressures facing our industry, we improved our margins,” added Knight. “We are achieving these results through a combination of expanding our fleet, significant rate increases, greater productivity from our trucks, and a never-ending mission of cost control.”